EX-99.1 2 g93682exv99w1.txt EX-99.1 PRESS RELEASE DATED MARCH 9, 2005 EXHIBIT 99.1 News Release [GLENAYRE LOGO] Contact: Debra Ziola 770 283 2569 investor.relations@glenayre.com (NASDAQ: GEMS) Glenayre Announces Fourth Quarter 2004 Results Company Reports Income from Continuing Operations ATLANTA -- MARCH 9, 2005 -- GLENAYRE TECHNOLOGIES, INC. (NASDAQ: GEMS), today reported income from continuing operations of $0.2 million for the fourth quarter of 2004, or $0.00 per share, which compares to a loss of ($1.2) million, or ($0.02) per share, for the third quarter of 2004 and a loss of ($1.6) million, or ($0.02) per share, for the fourth quarter of 2003. The Company reported revenue of $13.3 million for the fourth quarter of 2004 compared to $14.9 million for the third quarter of 2004 and $15.5 million for the fourth quarter of 2003. The Company attributed the decrease in revenue over the third quarter of 2004 primarily to typical seasonal deployment patterns by the Company's customers. The decrease in revenue over the fourth quarter of 2003 is attributable primarily to an atypically large equipment purchase in the fourth quarter of 2003 by one of the Company's largest customers. "Our fourth quarter results are evidence of the progress Glenayre has made toward its goal of returning to consistent profitability," stated Clarke Bailey, Chairman and CEO of Glenayre. "We continue to develop and deliver exciting, new applications and work toward expansion into emerging markets such as IP-based voice messaging. Our recently announced contract with MTN is confirmation that our messaging solutions are competitive and we can win significant new business, both in the U.S. and internationally." In addition to the MTN contract, a few of Glenayre's most recent international systems sales include SabaFon, Bulgarian Telecommunications Company (BTC), Asia-Cell Iraq, Mobile Telecommunications Namibia, Special Communications Organization (SCO) Pakistan, and Vietnam Viettel. The Company reported that gross margins for the fourth quarter of 2004 were 61% compared to 49% for the third quarter of 2004 and 41% for the fourth quarter of 2003. The margin improvement in the fourth quarter of 2004 was attributed primarily to a greater proportion of higher margin system expansion products as compared to the third quarter of 2004. In addition, gross margins for the fourth quarter of 2004 were favorably impacted by a net favorable adjustment of approximately $467,000 as a result of the Company's agreeing to licensing terms with two unrelated parties with respect to certain technologies used in the Company's products, and a $295,000 reduction to the warranty liability as a result of lower warranty experience rates. The lower gross margins in the fourth quarter of 2003 resulted in large part from a $1.6 million charge the Company took for the loss on an unfavorable contract with one of its major customers. Including discontinued operations, the Company reported net income of $2.7 million, or $0.04 per share, for the fourth quarter of 2004, compared to $3.5 million, or $0.05 per share, for the third quarter of 2004 and $12.1 million, or $0.18 per share, for the fourth quarter of 2003. During the fourth quarter of 2004, the Company recorded income from its discontinued paging operations of $2.4 million, primarily due to receiving a payment of $1.7 million ($2.0 million Canadian) that had been placed in escrow by Pilot Pacific Holdings (Pilot) as part of the Company's previously reported settlement with Pilot related to the Company's former Vancouver facility. As of December 31, 2004, the Company reported a total cash and short-term investments balance of $94.9 million, compared to $90.3 million at September 30, 2004 and $98.9 million at December 31, 2003. The Company expects to use its cash and short-term investments for a variety of purposes, including potential acquisitions, normal capital and operating expenses relating to continuing operations, and disbursements relating to liabilities associated with its discontinued paging operations. Glenayre reported that it continues to aggressively pursue acquisition opportunities both in and out of the messaging space. The Company also reported that in reliance on an exemptive order issued by the Securities and Exchange Commission (SEC), it plans to file its 2004 Annual Report on Form 10-K in mid-March without including Management's Annual Report on Internal Control Over Financial Reporting and the related Attestation Report of the Registered Public Accounting Firm required for the first time in the 2004 Form 10-K. In compliance with the exemptive order, the Company will file an amendment to the Form 10-K to include this information no later than April 29, 2005. The Company noted that the delay in filing the internal control report and related attestation report was necessitated by resource constraints at both the Company and its external auditors. About Glenayre Glenayre is a global provider of next-generation messaging solutions and enhanced services for wireless and wireline carriers, and MSO/cable companies. Glenayre systems are designed on open platforms with a standards-based architecture supporting IP and traditional telephony networks for an evolution from 2G to 2.5G and 3G services. More than 200 service providers in over 60 countries have deployed Glenayre messaging solutions for voice, fax and e-mail messaging, including one-number services, voice navigation and voice dialing, mailbox out-dialing and one-button call return. Glenayre, headquartered in Atlanta, Georgia, has been providing carrier-grade communications solutions for the global market for over 40 years. For more information, please visit http://www.glenayre.com. Safe Harbor Statement This news release contains statements that may be forward looking within the meaning of applicable securities laws. The statements may include projections regarding future revenues and earnings results, and are based upon the Company's current forecasts, expectations and assumptions, which are subject to a number of risks and uncertainties that could cause the actual outcomes and results to differ materially. These results and uncertainties are discussed in the Company's most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q. These factors include, but are not limited to, restructuring activities; effective convergence of technologies; potential market changes resulting from rapid technological advances; competition; variability of quarterly results and dependence on key customers; volatility of stock price and risk of delisting from the NASDAQ Stock Market; ability to attract and retain key personnel; proprietary technologies; potential changes in government regulation; potential acquisitions and strategic investments; continuation and expansion of third party agreements; litigation; international business risks and continued terrorist attacks, war or other civil disturbances. # # # Glenayre, Versera, Versera ICE and the Glenayre logo are trademarks of Glenayre Electronics, Inc. GLENAYRE TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
DECEMBER 31, DECEMBER 31, 2004 2003 ---------------- ---------------- (UNAUDITED) ASSETS Current Assets: Cash and cash equivalents $ 82,691 $ 65,853 Short-term investments 12,180 33,007 Restricted cash 30 3,148 Accounts receivable, net 7,695 9,769 Inventories, net 6,163 5,828 Other current asset, discontinued operations -- 3,374 Prepaid expenses and other current assets 2,863 3,180 ---------------- ---------------- Total Current Assets 111,622 124,159 Property, plant and equipment, net 8,812 8,365 Other assets 848 831 ---------------- ---------------- TOTAL ASSETS $ 121,282 $ 133,355 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 3,552 $ 3,142 Deferred revenue 3,754 4,369 Accrued liabilities 11,912 20,695 Accrued liabilities, discontinued operations 3,284 7,567 ---------------- ---------------- Total Current Liabilities 22,502 35,773 Other liabilities 3,497 4,000 Accrued liabilities, discontinued operations - noncurrent 98 3,350 Stockholders' Equity: Preferred stock, $.01 par value; authorized: 5,000,000 shares, no shares issued and outstanding -- -- Common stock, $.02 par value; authorized: 200,000,000 shares, outstanding: 2004 - 66,820,124 shares; 2003 - 66,384,928 shares 1,336 1,327 Contributed capital 362,698 362,273 Accumulated deficit (268,849) (273,368) ---------------- ---------------- Total Stockholders' Equity 95,185 90,232 ---------------- ---------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 121,282 $ 133,355 ================ ================
GLENAYRE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, ----------------------- 2004 2003 -------- -------- REVENUES: Product sales $ 8,065 $ 10,769 Service revenues 5,237 4,712 -------- -------- Total Revenues 13,302 15,481 -------- -------- COST OF REVENUES (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): Cost of sales 2,913 6,499 Cost of services 2,248 2,569 -------- -------- Total Cost of Revenues 5,161 9,068 -------- -------- GROSS MARGIN (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): 8,141 6,413 OPERATING EXPENSES: Selling, general and administrative expense 5,274 4,485 Provision for doubtful receivables, net of recoveries 75 (20) Research and development expense 2,509 3,399 Restructuring expense (42) 64 Depreciation expense 497 371 -------- -------- Total Operating Expenses 8,313 8,299 -------- -------- OPERATING LOSS (172) (1,886) -------- -------- OTHER INCOME (EXPENSE): Interest income 390 280 Interest expense (8) (10) Gain on disposal of assets, net 25 12 Realized and unrealized losses on securities -- (25) Other income (losses), net 22 (8) -------- -------- Total Other Income 429 249 -------- -------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 257 (1,637) Provision (Benefit) for income taxes 13 (12) -------- -------- INCOME (LOSS) FROM CONTINUING OPERATIONS 244 (1,625) INCOME FROM DISCONTINUED OPERATIONS (NET OF INCOME TAX BENEFIT) 2,424 13,745 -------- -------- NET INCOME $ 2,668 $ 12,120 ======== ======== INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE (1): Income (Loss) from continuing operations $ 0.00 $ (0.02) Income from discontinued operations 0.04 0.21 -------- -------- Net Income per weighted average common share $ 0.04 $ 0.18 ======== ======== INCOME (LOSS) PER COMMON SHARE -- ASSUMING DILUTION (1): Income (Loss) from continuing operations $ 0.00 $ (0.02) Income from discontinued operations 0.04 0.21 -------- -------- Net Income per weighted average common share -- assuming dilution $ 0.04 $ 0.18 ======== ========
(1) Income (Loss) per weighted average common share amounts are rounded to the nearest $.01; therefore, such rounding may impact individual amounts presented. GLENAYRE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
TWELVE MONTHS ENDED DECEMBER 31, --------------------------- 2004 2003 ---------- ---------- (UNAUDITED) REVENUES: Product sales $ 30,423 $ 40,795 Service revenues 20,152 17,364 ---------- ---------- Total Revenues 50,575 58,159 ---------- ---------- COST OF REVENUES (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): Cost of sales 16,381 20,492 Cost of services 9,215 10,269 ---------- ---------- Total Cost of Revenues 25,596 30,761 ---------- ---------- GROSS MARGIN (EXCLUSIVE OF DEPRECIATION SHOWN SEPARATELY BELOW): 24,979 27,398 OPERATING EXPENSES: Selling, general and administrative expense 20,049 22,806 Provision for doubtful receivables, net of recoveries 92 (291) Research and development expense 12,244 17,530 Restructuring expense 80 2,201 Depreciation expense 1,783 1,104 ---------- ---------- Total Operating Expenses 34,248 43,350 ---------- ---------- OPERATING LOSS (9,269) (15,952) ---------- ---------- OTHER INCOME (EXPENSE): Interest income 1,203 1,489 Interest expense (228) (61) Gain on disposal of assets, net 84 26 Realized and unrealized losses on securities -- (25) Other income, net 15 52 ---------- ---------- Total Other Income 1,074 1,481 ---------- ---------- LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (8,195) (14,471) Provision (Benefit) for income taxes (55) 27 ---------- ---------- LOSS FROM CONTINUING OPERATIONS (8,140) (14,498) INCOME FROM DISCONTINUED OPERATIONS (NET OF INCOME TAX BENEFIT) 12,659 16,131 ---------- ---------- NET INCOME $ 4,519 $ 1,633 ========== ========== INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE (1): Loss from continuing operations $ (0.12) $ (0.22) Income from discontinued operations 0.19 0.25 ---------- ---------- Net Income per weighted average common share $ 0.07 $ 0.02 ========== ========== INCOME (LOSS) PER COMMON SHARE -- ASSUMING DILUTION (1): Loss from continuing operations $ (0.12) $ (0.22) Income from discontinued operations 0.19 0.25 ---------- ---------- Net Income per weighted average common share -- assuming dilution $ 0.07 $ 0.02 ========== ==========
(1) Income (Loss) per weighted average common share amounts are rounded to the nearest $.01; therefore, such rounding may impact individual amounts presented. GLENAYRE TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 2004 2003 2004 2003 -------- -------- -------- -------- (UNAUDITED) (UNAUDITED) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 4,946 $ (424) $ (2,277) $(14,526) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (462) (413) (2,146) (3,629) Proceeds from sale of property, plant and equipment -- 8,208 -- 8,208 Maturities of (investment in) short-term securities, net 16,902 5,560 20,827 10,877 -------- -------- -------- -------- NET CASH PROVIDED BY INVESTING ACTIVITIES 16,440 13,355 18,681 15,456 -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 61 278 434 841 Purchase of treasury stock -- -- -- (34) -------- -------- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 61 278 434 807 -------- -------- -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 21,447 13,209 16,838 1,737 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 61,244 52,644 65,853 64,116 -------- -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 82,691 $ 65,853 $ 82,691 $ 65,853 ======== ======== ======== ======== SUPPLEMENTAL DATA: RECONCILIATION OF CASH AND CASH EQUIVALENTS TO CASH AND SHORT-TERM INVESTMENTS: Cash and cash equivalents $ 82,691 $ 65,853 $ 82,691 $ 65,853 Short-term investments 12,180 33,007 12,180 33,007 -------- -------- -------- -------- CASH AND SHORT-TERM INVESTMENTS $ 94,871 $ 98,860 $ 94,871 $ 98,860 ======== ======== ======== ========